On November 25, 2009, the FTC announced that it approved SCI’s acquisition of Palm Mortuary, Inc. (“Palm”) as long as it sold a cemetery and funeral home in Las Vegas.
The FTC alleged that Las Vegas has a highly concentrated market for cemetery services, which includes burial plots, opening and closing of graves, memorials, burial vaults, mausoleum spaces, and cemetery maintenance. According to the FTC’s complaint, SCI’s proposed acquisition of Palm would have reduced the number of significant competitors from three to two, and SCI would have controlled 76 percent of the market for funeral services.
The complaint alleges that the transaction would have increased the likelihood that the combined firm could raise prices either unilaterally or through coordinated interaction with its only remaining competitor. Entry of a new competitor in the area is not likely to counteract the alleged anticompetitive effects of the acquisition, due in part to the limited amount of land in Las Vegas that is suitable for cemeteries.
The FTC’s consent order is designed to remedy the anticompetitive effects of the proposed acquisition by requiring SCI to divest Davis Memorial Park, currently its only cemetery in the Las Vegas area, as well as the funeral home on the same property. SCI also will be required to divest the rights to the Davis trade name and the pre-need service contracts associated with the Davis facility as well as another funeral home it owns in the Las Vegas area.
The divestiture must be made to an FTC-approved buyer, and completed within 90 days after SCI acquires Palm. If the FTC finds that the purchaser or manner of the proposed divestiture is unacceptable, SCI must immediately rescind the offer and divest the assets to another FTC-approved buyer within six months from when the order becomes final. The proposed order requires SCI to give prior notice to the Commission before acquiring any interest or assets related to the provision of cemetery services in the Las Vegas area for the next 10 years.
The Commission vote approving the proposed consent order was 4-0.